Power Grid Corporation of India Ltd (PGCIL), the state-owned transmission company, is diversifying into wire and network strengthening business, which it sees as a big emerging investment avenue in the power sector.
The company plans to undertake laying, strengthening and maintenance of wires of the distribution firms, R N Nayak, chairman and managing director, PGCIL, said.
PGCIL has applied for expansion and strengthening of distribution wires in Odisha and is awaiting approvals from the state government and the regulator.
The company, however, has no plans to enter the other distribution segments of supplying power and back office jobs such as bill collection and redressal of complaint grievances.
“We want to enter the wire business which requires urgent attention to ensure decline in technical losses and we think it is the next happening space where big investment will flow in,” he said.
Nayak refused to project revenue generation from the segment, but said the return on equity would be in line with the current transmission business of at least 15.5%. “I cannot give revenue projection from wire strengthening vertical as it will depend on our capex and returns fixed by regulatory body on our capex.”
Nayak said the company planned to hive off international business of PGCIL into a separate company and would soon appoint consultants for it.
“In the last fiscal, our revenue from international business was a paltry `24 crore which we are expecting to raise to `90 crore this fiscal with more penetration into African counties,” he said.
An analyst with a domestic brokerage said slower capitalisation may impact its revenue, going forward. “For Q2, PGCIL had aimed `3,500 crore of capitalisation but it only recorded `2,600 crore which can make its target of achieving `17,000 crore capitalisation this fiscal a difficult task.”
Also, PGCIL will issue $500 million dollar-denominated bond by mid-December, said R T Agarwal, director, finance. It has appointed RBS, Barclays and Standard Chartered as merchant bankers for the issue.
“Road show will start in early December,” he said.
PGCIL has earmarked a capex of `20,000 crore for this fiscal and expects to raise `2,800 crore through the dollar bond sale. It may go for a local bond sale in January if more capital is required, said another official.